Rolls-Royce to return £9bn to investors as profits soar
Rolls-Royce will return up to £9billion to investors by 2028 after it reported soaring annual profits.
The engineering giant reported a £3.46billion underlying operating profit on sales of just over £20billion, following a strong performance by its aero engines unit and increased power demand for data centres.
Rolls-Royce, whose engines power Airbus A350 jets and Boeing 787s, has cashed in on demand for its commercial aircraft engines and been boosted by a restructuring under chief executive Tufan Erginbilgic, nicknamed Turbo Tufan.
It has also been buoyed by higher defence spending, a renewed focus on energy generation and expectations for its planned small modular nuclear reactors.
Rolls-Royce told investors this mornin that it was delivering a big upgrade to mid-term profit targets to £4.9billion-£5.2billion, from £3.6billion-£3.9billion previously.
The FTSE 100 giant also announced the plan to hand cash back to investors with a £7 to £9billion share buyback between 2026 and 2028, with £2.5billion to be completed this year. It will pay a final dividend of 5p per share, taking the total dividend to 9.5p.
The good results led shares in Rolls-Royce to open 5.5 per cent higher this morning.
Rolls Royce makes more than half of its revenue from its aero engine business
After being battered in the pandemic, this has led to repated profit upgrades and Rolls-Royce shares have more than doubled over the last 12 months and rocketed 1,185 per cent over five years.
‘We are consistently achieving outcomes that were not possible before our transformation,’ Erginbilgic said.
‘With our new capabilities and mindset, we have navigated challenges from supply chain to tariffs, and delivered a strong performance in 2025, all while we built the foundations for significant growth for years to come.’
Expectations have been running high for Rolls-Royce's results, with rival British engineer and defence giant BAE reporting record profits last week.
While Rolls-Royce's military capabilities have come into sharp focus, its civil aerospace division, which accounts for over half of revenue, reported higher profits as sales rose 15 per cent to £10.4billion
Underlying operating profits at the business rose to £2.1billion, from £1.5billion a year earlier.
Rolls-Royce is also cashing in on the increased need for power generation across data centres and government, as revenue at its power systems business jumped 19 per cent to £4.9billion.
Meanwhile, revenue at its defence division grew 8 per cent to £4.8billion, following strong performance across transport and combat, and 11 per cent growth in naval.
‘Rolls-Royce reported 2025 results, beating expectations and more importantly releasing very strong 2026 and 2028 targets, which should trigger significant earnings upgrades,' Bernstein analysts said in a note.
Its £600million cash savings exceeded the previous £500million. Net cash, which stood at £475million last year, now stands at £1.9billion.
Richard Hunter, head of markets at Interactive Investor said: 'Of course, with punchier valuations come higher expectations and more pressure to keep growing earnings to stay in line.
'However, there is nothing in this sparkling set of results which casts any immediate doubt either on the group’s current ability to deliver, nor indeed its outlook over the coming years.'
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